Sanctioned Russian Railway misses bail payment

” href=”https://www.law360.com/financial-services-uk/articles/1482701/#”>Ronan Barnard ·


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” href=”https://www.law360.com/financial-services-uk/articles/1482701/#”>Ronan Barnard Law360, London (April 11, 2022, 4:58 p.m. BST) — Russian Railways has no failed to make bond payments under sanctions related to the invasion of Ukraine, a European debt committee said on Monday, making it the first time a company in the country has defaulted on a debt instrument. debt.

The EMEA’s Credit Derivatives Determination Committee, made up of international investment banks, has announced that its 14 members have decided that the rail operator, RZD OAO, has not paid interest on the participation certificates to the loan in Swiss francs which matured on March 28.

The notes, due in 2026, were issued by the company’s financing vehicle, RZD Capital PLC, to fund a 250 million Swiss franc ($268 million) loan to the state-owned rail operator. The European Union and the British government imposed sanctions on the company in February.

Representatives from JPMorgan, Deutsche Bank and Credit Suisse were among the committee members who voted yes on April 8 on whether a “default” credit event had occurred.

Judgments by determination committees can trigger derivative contracts insuring a borrower’s debt against default, providing financial protection for bondholders.

Irish firm RZD Capital said it attempted to make interest payments on March 14 as they were due, but failed due to legal and regulatory hurdles. He said he would “continue to liaise with the borrower to get more information” about receiving payment.

Fitch delisted RZD Capital in early April, citing its obligation to comply with EU sanctions and suspending all business activity in the country.

The vote comes after a major Russian bank suspended interest payments earlier this month on dollar Eurobonds worth $1.2 billion due to Western sanctions. The British government has also announced that it impose new sanctions on Russia, including the two daughters of President Vladimir Putin, as well as several other oligarchs and moneylenders.

The sanctions also limited the Russian government’s ability to make bond payments after it was forced to pay $650 million on foreign bonds denominated in dollars into roubles, which raised speculation that the government was at risk of default.

–Additional reporting by Richard Crump. Editing by Joe Millis.

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